Botox helps to create an Irish boom town amid economic gloom

Also used to treat medical conditions, Allergan’s anti-ageing product has made Westport in Co Mayo a success story

Under the shadow of Ireland’s holiest mountain, Croagh Patrick, in one of the most bucolic parts of the country’s Atlantic seaboard, the global production hub of Botox is preparing for a major gear change.

Allergan, which manufactures the wrinkle-busting cosmetic on the outskirts of Westport in Co Mayo, estimates that within five years 60% of Botox sales will be for illnesses ranging from cerebral palsy to chronic migraines as well as for anti-ageing treatments.

Despite the recession and a banking crisis that has almost bankrupted the Irish state, the pharmaceutical industry has kept faith with the republic, where nine of the top 10 global pharma companies still have a presence. This month Allergan announced it is expanding its workforce in the west of Ireland tourist trap to more than 1,000 as well as building a new research and development centre in the coastal town.

Allergan’s quarterly profit figures were revealed last Thursday in the US at 9.8m (£176m), up 6% from last year’s fourth quarter. Global sales of Botox, which remains its key product, grew 8% in the fourth quarter to 5.3m. Regardless of the eurozone turmoil and global recession, consumers and health bodies are still clamouring for Botox.

As Ireland seeks to trade its way out of the doldrums, Allergan’s decision marks a vote of confidence among the multinational business community that helped fuel the country’s economic revolution during the 1990s. The company has a long history of involvement in the republic and its presence is estimated to inject an average m of capital expenditure in the republic per annum.

Allergan’s managing director in Ireland, Pat O’Donnell, grew up on a 26-acre farm just five miles from the Westport plant. Straight from college, the genial O’Donnell worked his way up from lab technician in the 1980s to lead the entire Irish operation. He is keen to emphasise that Botox is much more than an intravenous means of rolling back ageing.

“What a lot of people don’t realise is that at present about 50% of the revenue we get from Botox is cosmetic, but the rest comes from therapeutic treatments such as juvenile cerebral palsy, adult spasticity and, just recently, we got approval for chronic migraine and overactive bladder in people with spinal cord injuries or patients suffering from MS.

“We expect that in the next four to five years it will probably switch to 60% of the revenue coming from therapeutic treatments rather than cosmetic,” says O’Donnell, who explains that the use of Botox to counter chronic migraine evolved out of its use as a beauty treatment. “Botox was being used to treat wrinkles and lines in the forehead, and some people doing that reported a reduction in migraine pain. I met a woman at a medical conference who told me she went from suffering around 28 days a month with severe migraine to just a few once she started using Botox.”

He stresses that Botox is not the only product made in the Westport plant. Other therapies include Ozurdex, a steroid implant that counteracts the onset of blindness by reducing inflammation of the retina.

Barry O’Leary, chief executive of Ireland’s Industrial Development Authority, whose inducements helped entice Allergan to Ireland, says its investment proves that the republic is still an attractive location for multinational industries, adding that its expansion at a time of recession is “a welcome endorsement of Ireland’s record with the development and manufacturing model.

“Nine of the top 10 global pharma and biopharma companies have a significant presence in Ireland. The sector benefits from a highly skilled workforce, an exceptionally strong track record in development, manufacturing and compliance, a competitive tax rate and easy access to global markets.”

O’Leary’s optimism about the country’s ability to keep the multinationals, particularly US corporations, is tempered this month by the ongoing fiscal crisis both in Ireland and the eurozone. In general, the economic news continues to cast a pall of gloom over the entire country. Last week, the Irish Central Bank downgraded the estimates for growth. It said Ireland would grow by 0.5% in 2012 and not 1.8% as the Fine Gael-Labour government had predicted. Unemployment remains one of the highest in the EU, with more than 14% of the labour force out of work, while emigration continues apace.

Yet, unlike so many places in Ireland, the “To Let” and “Closing Down Sale” signs that proliferate all over main streets from the capital to the smallest village are more or less absent in the centre of Westport. Allergan’s presence and continued demand for Botox appears to have saved it from the worst ravages of the economic downturn.

The town, which Beirut hostage Brian Keenan chose as a haven to settle in after his release years of captivity during the 1980s, also has a multinational feel. Twelve languages are spoken at the Allergan plant and, as O’Donnell notes, the workforce has stayed loyal to the town and the company, with the average worker spending 11 years at the factory.

“That demonstrates serious loyalty and a lot of what we do is commercially sensitive with very specialised, technical knowledge. So because we can keep that within the organisation by virtue of the fact that we have a low employee turnover, it makes Westport even more attractive,” O’Donnell says.

Although he underlines the importance of having a highly educated, skilled workforce that has access to a European market of 500 million consumers, O’Donnell concedes that the republic’s low 12.5% corporation tax rate is still a major factor in convincing hard-nosed US executives that Ireland should be their foreign manufacturing base.

Such is the success of the corporate tax rate in attracting hi-tech export-driven foreign direct investment that the devolved government north of the border in Belfast has been petitioning the UK Treasury, thus far unsuccessfully, to grant Northern Ireland special status and lower its rate to the same level as the south.

“It’s hugely important for a couple of reasons,” says O’Donnell. “One, of course, is the low rate – and the message that it is staying low is vital. It should not even move, because once it starts to move that would send a negative psychological signal to corporations. The corporation tax is the bedrock, but it is also important that Ireland has a very transparent tax system, which works to our advantage. As well as manufacturing, Allergan runs a lot of its financial services in Ireland because of our tax system.”

Allergan is based in the home constituency of Ireland’s prime minister, Enda Kenny. When it comes to corporation tax and attempts by the republic’s European partners, particularly the French, to try to tie Ireland’s EU bailout to changes in the capital taxation regime, O’Donnell’s message to the taoiseach is simple: “Fight, fight and fight again to keep our corporation tax rate. We must always, always leave that 12.5% rate alone and don’t mess with it.”